Correlation Between Agios Pharmaceuticals and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both Agios Pharmaceuticals and PennantPark Investment at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Agios Pharmaceuticals and PennantPark Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agios Pharmaceuticals and PennantPark Investment, you can compare the effects of market volatilities on Agios Pharmaceuticals and PennantPark Investment and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Agios Pharmaceuticals with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agios Pharmaceuticals and PennantPark Investment.
Diversification Opportunities for Agios Pharmaceuticals and PennantPark Investment
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Agios and PennantPark is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Agios Pharmaceuticals and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and Agios Pharmaceuticals is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Agios Pharmaceuticals are associated (or correlated) with PennantPark Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Investment has no effect on the direction of Agios Pharmaceuticals i.e., Agios Pharmaceuticals and PennantPark Investment go up and down completely randomly.
Pair Corralation between Agios Pharmaceuticals and PennantPark Investment
Assuming the 90 days horizon Agios Pharmaceuticals is expected to generate 1.71 times more return on investment than PennantPark Investment. However, Agios Pharmaceuticals is 1.71 times more volatile than PennantPark Investment. It trades about 0.29 of its potential returns per unit of risk. PennantPark Investment is currently generating about 0.08 per unit of risk. If you would invest 4,160 in Agios Pharmaceuticals on August 28, 2024 and sell it today you would earn a total of 1,090 from holding Agios Pharmaceuticals or generate 26.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Agios Pharmaceuticals vs. PennantPark Investment
Performance |
| Timeline |
| Agios Pharmaceuticals |
| PennantPark Investment |
Agios Pharmaceuticals and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agios Pharmaceuticals and PennantPark Investment
The main advantage of trading using opposite Agios Pharmaceuticals and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agios Pharmaceuticals position performs unexpectedly, PennantPark Investment can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in PennantPark Investment will offset losses from the drop in PennantPark Investment's long position.| Agios Pharmaceuticals vs. PennantPark Investment | Agios Pharmaceuticals vs. Nordic Semiconductor ASA | Agios Pharmaceuticals vs. American Eagle Outfitters | Agios Pharmaceuticals vs. SLR Investment Corp |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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